Friday, January 12, 2007

Corn and petroleum course through our veins. As Michael Pollan convincingly argues in The Omnivore's Dilemma, what we eat has become almost as corn-based as our driving is petroleum-based. And without cheap oil, corn would not have become Big Corn, the big agricultural combines (principally ADM and Cargill). Now corn is making a play for a chunk of the transportation market once surrendered to Big Oil. The inefficiencies of corn ethanol be damned, Big Corn can make money on the ethanol boom coming and going.

It's been a different story for Mexico's farmers. They have had a tough time dealing with the influx of cheap American corn since NAFTA. As reported in Forbes, "The government eliminated its decades-old subsidy for tortillas in 1999 just as cheap corn imports were rising from the United States under NAFTA." Abundant petroleum-fueled American corn kept the price of tortillas down in Mexico City for a while. Then America found yet another use for corn, and the price has been bid up.

"The U.S. Agriculture Department said Friday that ethanol plants and foreign buyers are gobbling U.S. corn supplies, pushing prices as high as $3.40 a bushel, the highest in more than a decade."

Mexicans are clamoring for an explanation of why tortilla prices are rising so fast. But America is beginning to be willing to pay for independence from Big Oil. Ethanol may be a political, economic and energy boondoggle, but that doesn't mean it ain't got juice.

And now corn production is down.

"Nationwide in the United States, supplies of corn are expected to drop to 752 million bushels, a drop from last month's forecast of 935 million bushels and a steep decline from last year's supply of 1.967 billion bushels.